Crude Oil Prices Fall Over 2% Amid Potential Israel-Lebanon Ceasefire Progress

Oil prices fell more than 2 per cent on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a deal to end the Israel-Hezbollah conflict, citing unnamed senior US officials.

Brent crude futures were down 2.45 per cent, or $1.84, at $73.34 a barrel, while US West Texas Intermediate crude futures were down 2.81 per cent or $2.00, at $69.24 a barrel.

Israel on Monday said it was moving toward a ceasefire in the war with Hezbollah but there are still issues to address.  Lebanese officials voiced guarded optimism but said Israeli Prime Minister, Benjamin Netanyahu, was not to be trusted.

Both Brent and US WTI contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since November 7 after Russia fired a hypersonic missile at Ukraine in a warning to the United States and the UK following strikes by Kyiv on Russia using US and British weapons.

Also, Israel’s cabinet will meet on Tuesday to approve a ceasefire deal with Hezbollah, a senior Israeli official said, while a Lebanese official said Beirut had been told by Washington that an accord could be announced “within hours”.

The signs of a diplomatic breakthrough were accompanied by heavy Israeli airstrikes on Beirut’s Hezbollah-controlled southern suburbs, as Israel pressed on with the offensive it launched in September after almost a year of cross-border hostilities.

Prime Minister, Netanyahu’s office declined to comment on reports that both Israel and Lebanon had agreed to the text of a deal. But the senior Israeli official told Reuters that a cabinet meeting was intended to approve the text.

Israeli officials had said earlier that a deal to end the war was getting closer though some issues remained, while two senior Lebanese officials voiced guarded optimism even as Israel continued to bombard Lebanon and Hezbollah kept up rocket fire.

Israel’s ambassador to the United Nations, Danny Danon, said Israel would maintain an ability to strike southern Lebanon under any agreement. Lebanon has previously objected to wording that would grant Israel such a right.

The US has pushed for a deal to end over a year of hostilities between Iran-backed Hezbollah and Israel, which erupted in parallel with Israel’s war against Palestinian Islamist group Hamas in Gaza, and has drastically escalated over the last two months.

In Beirut, Elias Bou Saab, Lebanon’s deputy parliament speaker, told Reuters there were “no serious obstacles” left to start implementing a US.-proposed ceasefire with Israel, “unless Netanyahu changes his mind”.

He said the proposal would entail an Israeli military withdrawal from south Lebanon and regular Lebanese army troops deploying in the border region, long a Hezbollah stronghold, within 60 days.

A sticking point on who would monitor compliance with the ceasefire had been resolved in the last 24 hours with an agreement to set up a five-country committee, including France and chaired by the United States, he said.

A Western diplomat said another stumbling block had been the sequencing of Israel’s withdrawal, the Lebanese army’s deployment and the return of displaced Lebanese to their homes in south Lebanon.

Meanwhile, hostilities have intensified in parallel with the diplomatic flurry. Over the weekend, Israel carried out powerful airstrikes, one of which killed at least 29 people in central Beirut, while Hezbollah unleashed one of its biggest rocket salvoes yet on Sunday, firing 250 missiles.

In Beirut, Israeli airstrikes levelled more of the Hezbollah-controlled southern suburbs on Monday, sending clouds of debris billowing over the Lebanese capital.

Efforts to clinch a truce appeared to advance last week when US mediator Amos Hochstein declared significant progress at talks in Beirut, then held meetings in Israel.

Michael Herzog, the Israeli ambassador in Washington, told Israel’s GLZ radio an agreement “could happen within days … We just need to close the last corners”, according to a post on X by GLZ senior anchorman Efi Triger.

Israel has dealt major blows to Hezbollah, killing its leader Hassan Nasrallah and other top commanders, and inflicting massive destruction in areas of Lebanon where the group holds sway.

Israel says it had no choice but to launch its ground and air campaign, to allow tens of thousands of Israelis to return to homes they were forced to evacuate after Hezbollah began firing across the border a day after the Hamas-led October 7, 2023 attacks on Israel that precipitated the war in Gaza.

Lebanon’s health ministry said Israeli attacks have killed 3,768 people in Lebanon and forced more than 1 million people from their homes. Its casualty figures do not distinguish between civilians and combatants.

Hezbollah strikes have killed 45 civilians in northern Israel and the Israeli-occupied Golan Heights. At least 73 Israeli soldiers have been killed in northern Israel and the Golan Heights, and in combat in southern Lebanon, according to Israeli authorities.

The outgoing US administration of President Joe Biden has emphasised diplomacy to end the Lebanon conflict, even as all negotiations to halt the parallel war in Gaza are frozen.

Diplomacy over Lebanon has focused on restoring a ceasefire based on UN Security Council Resolution 1701, which ended the last major war between Hezbollah and Israel in 2006.

Emmanuel Addeh

Follow us on: